Resources

Newsroom

Back to Media & Press Releases
Media

Independent Mortgage Bankers See Profit per Loan Nearly Halved in 2018

National Mortgage News Vector Logo

Surging loan production expenses and low revenue killed profits in 2018 for loans originated by independent mortgage bankers and subsidiaries of chartered banks, according to the Mortgage Bankers Association.

National Mortgage News 
Paul Centopani

Surging loan production expenses and low revenue killed profits in 2018 for loans originated by independent mortgage bankers and subsidiaries of chartered banks, according to the Mortgage Bankers Association.

The grouping averaged a yield of $367 per origination in 2018, down from 2017's $711. The fourth quarter's net losses dragged that number down.

"Despite a healthy economy in 2018, the mortgage market suffered, as rate hikes hurt refinancing volume and low housing inventories priced some potential homebuyers out of the purchase market," Marina Walsh, the MBA's vice president of industry analysis, said in a press release.
"For mortgage companies, there was the perfect storm of lower production revenues combined with rising expenses, which together contributed to the lowest net production income per loan since 2008. Production revenues per loan dropped despite study-high loan balances in 2018. At the same time, production expenses per loan grew to a study-high of $8,278 per loan last year."

Total production revenues averaged $8,645 per loan in 2018, down from $8,793 year-over-year. Total loan production expenses — which account for commissions, compensation, occupancy, equipment, corporate allocations and other expenses — increased to $8,278 per loan in 2018, up from $8,082 in 2017.

View complete article

-------------------------------------------------------------------------------------------------

Want to learn more?  Check out our April 17, 2019 - Industry Insight Blog entitled Rising Loan Costs and The Need for ROI from AI Foundry President Steve Butler. 

"Overall, there is a market opportunity for both lenders and technology providers, but first we need to find ways to drive down the high cost of processing loans. Reducing these costs can benefit consumers, lenders and technology providers. Fintech providers can lead the way in this effort, but they must show a convincing ROI first. I invite you to try the AI Foundry ROI calculator to estimate your annual cost and time savings."  —Steve Butler, AI Foundry President.